tv Your Business MSNBC October 29, 2011 5:30am-6:00am EDT
hi there, everyone. i'm j.j. ramberg. welcome to "your business" where we give you tips and advice to help your small business grow. it is the number one concern we hear from all over the country. they say they can survive this economic climate as long as customers keep spending. we are going to focus on ways to entice customers and gain their loyalty. knowing your customers is key to a successful business. how well do you need to know them? one salon owner is learning where his clients live and how much they are willing to spend to successfully expand his brand. >> there's just a lot more homework not to make a mistake.
i don't have the time. i have to make the time for this. it's the difference between success and failure. >> he knows his customers, understands their needs and is doing his best to keep them coming. >> we're a community based type business. i need a lot of families. >> they are known for their high-end product. >> the ideal customer is someone that likes a luxury brand. if they are going to spend a lot of money for their services, they want to be guaranteed a result. >> making sure every cut and man cure is just right. he puts in his share of overtime. >> my day starts at 5:30 and ends sometimes at midnight. >> the long hours transferred into a profitable brand with 200 employees. maintaining those figures has maintained a challenge in today's economy.
>> in today's market, money is a commodity that you can't risk losing rapidly. mistakes have to be at a minimum. >> to avoid potential pitfalls he was doing plenty of research to expand his business. >> once you go up, you have to stay up. the only way to change is to go down. it's not what he's looking to do. >> that's why he's adding a new line designed to appeal to a new batch of customers. he's calling it b-2. >> he lives, drinks the salon. his passion is building his empire. >> he's very intuitive. his intuition and knowing what clients want, i would have to say benefits us the most. >> they promise the same service atmore affordable services. before he opens a single door,
he wants to know about his potential clients. >> i have to study the demographics for expansion. i have to do it the old fashioned way. i have to be in the area presently and looking for sights myself and getting the feel of the area. studying what's important. are there schools around there. are there banks. are there, in some areas community centers. >> they aren't the only things he wants to know, either. >> we look at the population family, how many in an average household. are people working in the area. >> he talks with local real estate agents and investors. >> i actually sit in the parking lot and i do that on usually every day of the week now. i look at what would somebody be like? is it a busy center. we drive the area.
we look at a five-mile radius of the location to look for key sights. >> once the new space has been picked, he'll fall back on his experience at bernards to start the marketing. he's known for making special offers they can't refuse. one of his ideas came to life when he realized who wasn't coming to the salon. >> we are all about not just soliciting to the higher end, but affordable for the younger client. >> that's why students get 50% off their services on mondays. >> for a long period of time, i didn't recognize that pricing sometimes holds back the desire to get that service done on a steady basis. >> it benefited the business in more ways than one. the offer had a ripple effect. >> what we were doing to attract
students, we found the mothers started liking our salon. we see a lot of mother and daughters coming in on mondays. >> young people weren't the only ones on his list, either. so were professionals with families. with that in mind, bernards was open seven days a week, sometimes as late as midnight. >> a lot of people travel into the city. they don't get home until 8:00 at night. they may go home, tuck thinker children in, then they are here. >> a professional woman works during the day. to come to the salon between 9:00 and 5:00 when most salons are open, it was ridiculous, we thought. >> for now, he's taking control of his own destiny. he believers his passion will pay off in the end. >> when you understand who is supporting your brand, you have a better opportunity to
duplicate or grow your existing business better because you understand what you have to do. >> one of the hardest things for a new small business to accomplish is distinguishing themselves from the competition. in order to do that, you have to make a good impression right from the very first meeting. it's what one entrepreneur did to steer customers away from bigger, more experienced competitors. ♪ food glorious food >> kids lunch is grown up business. >> we had a daily soup. we have a full salad bar with fresh salad and raw veggies. >> this founder provide healthy organic meals for more than 1,000 students around new york city. she started the company in 2008 with her co-founder.
between them, they have an mba and nutrition background, but no commercial cooking experience. so, how did they feed out more when it came to drumming up business? >> our competition is everything from a small mom and pop catering company to the biggest of food service companies that serve school, hospitals and health care facilities. >> first, they looked the part. their personal experience had a lot to do with getting the first contract. >> there was a parent committee formed at this school who was asked to participate in the selection of the food vendor. we were up against a big guy. when it came down to making a decision, the fact we were young, healthy ourselves and had small children we want to see grow from eating healthy food was a favor in our court. >> second, prospects were drown in my their sales pitch.
>> she was enthusiastic as could be. it was contagious. we said, let's see what we can do here. >> a lot of people are passionate and committed. a lot of people have business ideas. what do you think made this one successful? made you go into someplace and have them respond by saying okay, i want to work with you. >> we didn't grow beyond our capabilities where we fall flat on our face. >> they have allowed the entire team to really understand their current and potential customers or rather the three types of customers it serves. they have to please the administration, the parents and, of course, the students. >> they like the pasta. the meat balls, i think if you had to vote, the meat balls would definitely win. >> this is the principal at another school. since the first meeting, she was
impressed with belinda's availability. >> she spends 24 hours a day with either a cell phone, computer or some sort of communication device. it doesn't matter what time, when i e-mail her, i get a response. >> their a-plus customer service is what won over the administrators. product demonstrations got the parents excited. they did a bake off and we won it. that was great. >> before butter beans came along, her daughter was eating rice for lunch almost every day. >> now she has to try something else. this is the good thing about it. i think she has to, she's more exposed to different things and wants to try it. >> as for the students, it's measured in the number of people coming for seconds. belinda says the company has not grown without mistakes but how they dealt with the mistakes has
made all the difference. >> when we make a mistake, we own it. we come to the client and say listen, this is our fault. this is how we are going to correct it. >> making sure they provide the best service for their customers is paying off. far from the days belinda was knocking on doors trying to get a meeting, they get most of their business from referrals. >> we get calls on a regular basis of inquiry, which is great. >> every once in awhile, she had the chance to walk through a lunchroom and take a step back to reflect on what she's done. >> it's a combination of usefulness, happiness, surrealism. our team made this possible. ♪ glorious food >> so, what else can a small business owner do to get customers and then keep them coming back? we have two of our favorite
entrepreneurs to answer that question. carol roth is a business strike that gis you can find her at carolroth.com. divya gugnani author of the book "sexy women eat" secrets to eating what you want and still look fabulous. what i loved about this piece and talking to them is i'm always interested in people who start up. how did you get them to work with you? >> if you really believe in what you are creating, they believed in healthy meals for children. it's obvious she's 100% vested in this. that passion when going to clients and trying to win business, it's obvious. are they going to put 100% effort into it where you are one client out of 1 million. what is the customer service going to be like? if you have a great product,
customer service, passion, you are going to win the business. >> if you have a product that's going to blow away the competition, let them have it for free. my dad was an electrician. he would go to businesses and say, i know you are worried about hiring me. let me work for a day. if you don't like what i do, you don't have to pay me anything. it takes the risk out of the equation. he does a great job, great customer service. it works for us. >> i like that better than discounting your service saying i will do it for less money than somebody else. >> you don't want to get into the discount making game. it's a loss profit for you. competition is thick. eroding away your margins is not the way to play the strategy. >> one effective tool you can use to get your business story to customers is creating your own online video. here is five ways to have it reach potential customers.
choose the right place to host your content. use youtube to maximize video view. pick a good title and description. include your most important keywords. stay as user friendly as possible. attaching a text transcription gives a better read. keep it short. don't let your videos run more than three minutes. if you have 30 minutes of content, make it into a series of smaller videos. finally, spread the word. post the video link on facebook and twitter. allow and encourage commenting on your video and ask employees and friends to help get the word out, too. when we come back, more ways to get loyalty from your customers. tips on extending your business' fan base. the owner of a dry cleaner
shows us how you can keep them coming back and spending more. sam: i'm sam chernin. owner of sammy's fish box. i opened the first sammy's back in 1966. my employees are like family. and, i want people that work for me to feel that they're sharing in my success. we purchase as much as we can on the american express open gold card. so we can accumulate as many points as possible. i pass on these points to my employees to go on trips with their families. when my employees are happy, my customers are happy. vo: earn points for the things you're already buying. call 1-800-now-open to find out how the gold card can serve your business.
most small businesses recognize they need to add social media tactics to marketing strategies and one of the primary selling points is the context of engaging potential customers. what are some of the things you should be doing to energize your fan base on a personal level? here is rieva lesonsky. great to see you. >> great to be here. >> there's so much talk of this, you are not just selling to people, you are creating a community and conversation with them. >> yes. >> you say highlight one of your fans. >> if you want to be a community where you are not just talking at people, but rather making sure people realize it's a community, pick out one of the fans and find out, are they having a commemorative time in their business, their 25th wedding anniversary or maybe they have hit a milestone, second sale or some big product.
whatever it is, pick them out, highlight them on facebook, twitter. introduce people to them. then people will be oh, i could be the next one highlighted. >> then people will retweet that. >> exactly. >> or make it their status update. the next one, offer promotions. >> this is key. if you want a fan of your business, nobody wants to pay full price. if you want them to like your facebook page, they are not going to like you because they like you. offer an incentive. it could be a discount or promotion, it could be a free ebook. you can put together an ebook fairly cheaply. give them an incentive to become your fan and they are going to tell other people. >> it's no different than having a competition to get their e-mail. it's just getting a like. >> crowd source an idea. that's smart, get everyone
engaged. >> get them invested in your business. it says to that customer or potential customer, they care about what i think. anytime somebody thinks you care about what they think, they are automatically more invested in helping you succeed. i think, it makes them part of your business and they are going to help you. >> another idea is to get a virtual advisory board. do good. >> you know this more than anybody else. americans want to help businesses that are being socially responsible and socially conscious. don't just say it, do it. let people know you are doing it. some research shows people that just claim they are a do gooder, nobody buys it anymore. everybody comes out of the woodwork saying yeah, we do this. participate in town events, charity events. something the community can look at you and know you care.
>> it's important. it has to be part of the fabric of who you are, not something you paste on. thanks. because of the volatility of the economy, many small business owners came up with creative ways to ensure their survival. the owners of a pennsylvania dry cleaner turned to their customers offering them deals they cannot refuse. >> you have to know your customer base. you have to know what they are wanting. >> rewarding customers is something we have always done. >> it's what the customers need and want. we have to adjust with them. >> they think they know how model cleaners, their pennsylvania based dry cleaning business is going to survive the recession. the general manager says it's about enticing their customers. >> it has been a difficult environment, it really has. people are wanting discounts.
they want a deal on dry cleaning. it's a luxury item in your budget. >> after sales dropped 8.5% in 2009 they looked at the data from 24 locations in western pennsylvania and ohio. >> we went to our information and said what is going on here. >> they track customer visits and the money they spend. what they found is some clients changed their habits. >> we noticed the customers were just holding on to their garments longer. instead of wearing pants once, it's two and three times over again. >> the group with the biggest impact on sales spends $100 to $500 a year. they are the same customers who changed the most. >> their frequency went down 32%. >> they are waiting every 38
days. >> there were spending the same amount of money, just coming in less frequently. >> they focused on ways to get those clients back in the door more often. >> they put more effort into a rewards program. >> we saw 20% increase in store sales by putting a rewards program. rewarding customers, recognizing them on their birthday and anniversary. >> they took it a step further but they focus their attention on only the clients who broke from their routine. >> the percent we were targeting is somewhere about 20% of our customers. >> they delivered a new discount offer around valentine's day. they put two deals to the test to see which generated higher sales. >> one store, $1 off if they brought in so many pieces of dry cleaning. the other place, a percentage
off. the idea was to bring in a bigger order size. >> in the end, more customers redeemed the percentage off. they brought in a bundle of clothing. >> the response rate was double where we had the percentage off compared to where we did the dollar off. it was offered for st. patrick's day. sales up, again, 10%. they decided to take their chances in april. the result? >> we did nothing in april. we saw the sales go back to what we had seen. april we were off 10%. >> to try to recoop losses, another discount hit mailboxes. they have been effective but john is still somewhat hesitant to give away so many deals. >> i think the key is, this is not a mass market offer. it's very targeted using aur
data to identify our customers that have been in recently. >> in the meantime, they are constantly looking at sales numbers while staying focused. >> always a work in progress. if i see the 30% not working, i may have to go 50%. if business is good, i might go 20. we have to adjust. >> adjust is what they will do as they try to figure out how to reward their clients, next. >> existing customers is the best solution to get through these difficult times. it's time to answer some of "your business" questions. carol and divya are with us. the first question, i have a fashion label and i'm targeting high end consumers. i would like to use direct marketing to reach out to potential customers.
how can i make it the most cost effective strategy. postcards are expensive. it's hard. >> no postcards. we live in a digital aid. if it's a fashion label and trying to drive people to a physical store, have promotions that are redeemable in the store. you want to drive the foot traffic inside the destination. you can use things like google ad words and search words. do facebook ads and build a following. if you are trying to build an online business, leverage lots of marketing tools, use social media, facebook. >> the postcards, the redemption rate, more people open their e-mail. more people open their e-mail than physical mail. the direct response rates are under 2% at this point. >> it's easy to do a test with it. >> question the strategy.
direct marketing and high-end fashion go together like filet mignon and jelly. there's going to be a trust gap there. they may want to partner with somebody that has a relationship with extra credibility, whether it's an organization, a network, another company. if you don't know them and you are reaching out, they are going to be like why are you reaching out to me. if you are going for a direct strategy, it's easier with somebody you already know, who likes you and trusts you than a brand-new high end consumer. if there's someone you can partner with to give you credibility. >> this is a question about marketing your company online. >> mainly, since the company is new, i would like to know how to make the company go viral. >> wouldn't we all like to know. >> there's a secret formula.
it's the ease formula. puppies, kitties and babies. i'm kidding. obviously you can't contrive viral. it's not a strategy or we would all make it. it goes viral when you make a connection and people have to share it. if you are a company, go and service your customers in a blow away fashion. blow away their minds. great service, great experience so they can not help but go tell their friends. do it in a positive way. >> you have done it. >> exactly. >> so, my first business didn't go viral. second business didn't go superviral but viral signs to it. the third one has been a completely viral business. the trend allows the information, the product, the service to be shared readily
through social media hooks. so you come online, you see a necklace, a ring, you are able to share it via e-mail, twitter and facebook. if you share it then you get $10. >> the rewards. >> use things where you can send an e-mail message through facebook. we built a community of 170,000 facebook fans. >> thank you. it's great advice. if you have a question, go to our website, the address is openforum.com/yourbusiness. hit the ask the show link to submit a question. again, openforum.com/yourbusiness. e-mail your questions and comments. looking to bring in new customers by keeping your marketing strategy fresh?
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other revenue streams for it. >> what do you use it for? we are a haunted house. every haunted house uses fog. it was one of those, wow, we didn't know that. >> when the air cleared, these entrepreneurs discovered new customers from haunted houses to nightclubs to rock concerts. until then, i'm j.j. ramberg. remember, we make "your business" our business. shazi: seven years ago, i had this idea. to make baby food the way moms would. happybaby strives to make the best organic baby food. in a business like ours, personal connections are so important. we use our american express open gold card to further those connections. last year we took dozens of trips using membership rewards points to meet with farmers that grow our sweet potatoes and rchants that sell our product.